Shares of workplace software company Atlassian Corporation (NASDAQ: TEAM), author of both Jira and Confluence, tumbled 6.3% through 10:45 a.m. ET Thursday.
Guggenheim analyst Howard Ma may be the reason.
Will AI create the world’s first trillionaire? Our team just released a report on the one little-known company, called an “Indispensable Monopoly” providing the critical technology Nvidia and Intel both need. Continue »
Ma lowered his price target on Atlassian stock to $115 this morning, a near-40% cut in his valuation of the stock, as reported today on TheFly.com. That sounds bad, but it’s worth noting that Atlassian stock currently trades below $60 a share. So while the price target was cut nearly in half, the analyst still predicts Atlassian shares could nearly double over the next 12 months.
And he still thinks Atlassian shares are a buy. He still believes Atlassian possesses a “deep technology moat … that AI cannot easily replace.”
So why cut the price target at all? Well, even if artificial intelligence doesn’t disrupt Atlassian’s business model entirely, it may still slow it down, limit its market share, or at least slow its expansion into that market as potential customers try AI before finally deciding to pay for Atlassian’s software products.
That’s the short-term threat. Long-term, however, Wall Street analysts generally agree that Atlassian has a long growth path ahead of it, and forecast 20% average annual earnings gains over the next five years. With the stock costing less than 13 times trailing free cash flow today, Atlassian stock looks cheap to me.
And today’s share price decline could be a buying opportunity in disguise.
Before you buy stock in Atlassian, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Atlassian wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $536,003!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,116,248!*
Now, it’s worth noting Stock Advisor’s total average return is 946% — a market-crushing outperformance compared to 190% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
